Tuesday, September 27, 2011

UGI Corp (UGI) 2011 Review (Dividend Growth Portfolio)

UGI Corp operates AmeriGas Propane, a gas utility, an electric utility, an energy services business and an international propane subsidiary. The company has grown earnings 17% over the last 10 years, though its dividend has increased at a slower pace. Return on equity has been 12-15% over that time period. UGI weathered the recent recession very well. Profits and dividends should continue to advance as a result of:

(1) higher throughput at its gas utility,

(2) an increased marketing effort,

(3) improved margins as a result of the sale underperforming assets,

(4) acquisitions.

The primary negative for UGI is that revenues are dependent on weather.
UGI is rated B++ by Value Line, has a 45% debt to equity ratio and its stocks yields 3.5%.

Stock YieldDividend Growth RatePayout Ratio # Increases Since 2001


Debt/EquityROEEPS Down Since 2001 Net MarginValue Line Rating



Note: UGI stock made modest progress off its March 2009 low, quickly surpassing the November 2008 trading high (green line). However, it struggled to break above the down trend off its June 2008 high (red line). Long term, UGI is an up trend; the straight blue line in the upper left corner is the upper boundary. Intermediate term, it is also in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a full position in UGI. Earlier this year, it sold one half of this holding at $32 and recently bought that position back. The upper boundary of its Buy Value Range is $17 and the lower boundary of its Sell Half Range is $44.